Certificate of Title
A Certificate of Title (CT) is simply the representation of the legal record showing land ownership. The CT will also include any interests and restrictions on the land.
The majority of CTs are now electronic however there are still paper CTs, usually held by owners who do not have a mortgage.
When a seller puts a contract together, in order to provide a representation of the CT in the contract, they will do what is called a title search.
The title search will show the name of the property owners, any restrictions on the land, any bank that holds a mortgage, any registered leases or other information related to the with the property.
Information on the Title Search
The title search will set out various information in relation to the land including what is known as a folio identifier. The folio is set out at the top left of the title search and includes the number of the lot (the block of land you are purchasing) and the deposited plan (DP) which is the number of the parcel of land created when the area was subdivided.
The relevant and important matters that should be reviewed on a title search include the following:
- Date issued: below the folio identifier you will find the search date. This is the date on which the search was ordered. If this date is old, it could be that any information on the title is no longer relevant or up-to-date. A new title search should be undertaken to ensure all information in relation to the title is known prior to contracting to buy a property.
- Owners name(s): under the heading “First Schedule” you will find the name of all of the owners of the land and you should always ensure that the names on the title search are exactly the same as the names on the front of the contract. If there are more than one, the type of ownership is also set out. Where the owners are joint tenants, they own the property jointly and if one passes away the ownership remains with the other joint tenant. Another type of land ownership are tenants in common where each owner owns a portion of the land and can sell that portion or leave their share to someone else in their will.
- Matters affecting the title: under the heading “Second Schedule” you will find a list of matters affecting the land. These could include:
- Easements: an easement indicates a right given to a person or authority to use the property. Commonly these easements are for services all rights of way such as an easement for drainage, an easement allowing authorities to access the land and work on the sewer main. You should always pay attention to all easements given that you may be restricted from building over any easement and therefore easements have an effect on your ability to develop the land in the future.
- Caveats: if you see the word caveat on a title search you should immediately seek legal advice. A caveat is a warning and the word actually means “beware”. If a caveat is lodged on the title with the state registry service the person who launched the caveat has a claim to part or all of the property which may prevent the owner from transferring the ownership from themselves to the purchaser.
- Covenants: the word covenant means an agreement to engaging all refrain from a specified action. Most covenants mean there is some level of restriction on what you can do on the land. Many new developments include building restrictions which will set out what you can build on the land, the size of what you can build on the land and can even restrict the materials used and the colours chosen. A purchaser should be aware of any restrictions on how they can use, and what they can build, on the land.
- Mortgage: often the final notation on a title search indicates the holder of the mortgage. This will show the name of the bank who holds the mortgage and usually holds the certificate of title on behalf of the owner. When buying a property, the seller will normally provide a discharge of mortgage at settlement so that a clear title is transferred to the buyer.
If you make an offer on a property and the offer is accepted, email the contract to eConveyancing NSW on hello@eConveyancingNSW.com.au and we can advise you on a preliminary basis free of charge on any major issues in the contract which you should be aware of before signing. In the majority of matters, we can undertake a preliminary review of the contract at no charge.
Call us on (02) 4049 5989 for a quote!